Yesterday afternoon, President Barak Obama gave a quip-filled speech at the Federal Trade Commission where he praised the FTC’s efforts in protecting American consumers over the past 100 years and unveiled his plans to implement legislation to protect American consumers from identity theft and to protect school children’s personal information from being used by marketers. These plans build upon past legislative efforts and the Administration’s focus on cybersecurity, Big Data, and Consumer Protection. Specifically, On February 23, 2012, the White House released “Consumer Data Privacy in a Networked World: A Framework for Protecting Privacy and Promoting Innovation in the Global Digital Economy” (the “Privacy Blueprint”) and in January 2014, President Obama asked his Counselor, John Podesta, to lead a working group to examine Big Data’s impact on government, citizens, businesses, and consumers. The working group produced Big Data: Seizing Opportunities, Preserving Values on May 1, 2014.

In his speech, the President highlighted the need for increased privacy and security protections as more people go online to conduct their personal business—shop, manage bank accounts, pay bills, handle medical records, manage their “smart” homes, etc.—stating that “we shouldn’t have to forfeit our basic privacy when we go online to do our business”. The President referenced his “Buy Secure” initiative that would combat credit card fraud through a “chip-and-pin” system for credit cards and credit-card readers issued by the United States government. In that system, a microchip would be imbedded in a credit card and would replace a magnetic strip since microchips are harder than magnetic strips for thieves to clone. A pin number would also need to be entered by the consumer into the credit card reader just as with an ATM or debit card. The President praised those credit card issuers, banks, and lenders that allowed consumers to view their credit scores for free. He also lauded the FTC’s efforts in the efforts to help identity theft victims by working with credit bureaus and by providing guidance to consumers on its website, identitytheft.gov.

The first piece of legislation the President discussed briefly was a comprehensive breach notification law that would require companies to notify consumers of a breach within 30 days and that would allow identity thieves to be prosecuted even when the criminal activity was done overseas. Currently, there is no federal breach notification law and many states have laws requiring companies to notify affected consumers and/or regulators depending on the type of information compromised and the jurisdiction in which the organization operates. The state laws also require that breach notification letters to consumers should include certain information, such as information on the risks posed to the individual as a result of the breach along with steps to mitigate the harm. This “patchwork of laws,” President Obama noted, is confusing to customers and costly for companies to comply with. The plan to introduce a comprehensive breach notification law adopts the policy recommendation from the Big Data Report that Congress pass legislation that provides for a single national data breach standard along the lines of the Administration’s May 2011 Cybersecurity legislative proposal. Such legislation should impose reasonable time periods for notification, minimize interference with law enforcement investigations, and potentially prioritize notification about large, damaging incidents over less significant incidents.

The President next discussed the second piece of legislation he would propose, the Consumer Privacy Bill of Rights. This initiative is not new. Electronic Privacy Bills of Rights of 1998 and 1999 have been introduced. In 2011, Senators John Kerry, John McCain, and Amy Klobucher introduced S.799 – Commercial Privacy Bill of Rights Act of 2011. The Administration’s Privacy Blueprint of February 23, 2012 set forth the Consumer Privacy Bill of Rights and, along with the Big Data Report, directed The Department of Commerce’s The National Telecommunications and Information Administration (NTIA) to seek comments from stakeholders in order to develop legally-enforceable codes of conduct that would apply the Consumer Privacy Bill of Rights to specific business contexts.

The Big Data Report of May 1, 2014 recommended that The Department of Commerce seek stakeholder and public comment on big data developments and how they impact the Consumer Privacy Bill of Rights draft and consider legislative text for the President to submit to Congress. On May 21, 2014, Senator Robert Menendez introduced S.2378 – Commercial Privacy Bill of Rights Act of 2014. The Consumer Privacy Bill of Rights set forth seven basic principles:

1) Individual control – Consumers have the right to exercise control over what information data companies collect about them and how it is used.

2) Transparency – Consumers have the right to easily understandable and accessible privacy and security practices.

3) Respect for context – Consumers expect that data companies will collect, use, and disclose the information they provided in ways consistent with the context it was provided.

4) Security – consumers have the right to secure and responsible handling of personal data.

5) Access and accuracy – Consumers have the right to access and correct their personal data in usable formats in a manner that is appropriate to the data’s sensitivity and the risk of adverse consequences if the data is not accurate.

6) Focused Collection – Consumers have the right to reasonable limits on the personal data that companies collect and retain.

7) Accountability – Consumers have the right to have companies that collect and use their data to have the appropriate methods in place to assure that they comply with the consumer bill of rights.

The President next discussed the third piece of legislation he would propose, the Student Digital Privacy Act. The President noted how new educational technologies including tailored websites, apps, tablets, digital tutors and textbooks transform how children learn and help parents and teachers track students’ progress. With these technologies, however, companies can mine student data for non-educational, commercial purposes such as targeted marketing. The Student Privacy Act adopts the Big Data Report’s policy recommendation of ensuring that students’ data, collected and gathered in an educational context, is used for educational purposes and that students are protected against having their data shared or used inappropriately. The President noted that the Student Digital Privacy Act would not “reinvent the wheel” but mirror on a federal level state legislation, specifically the California law to take effect next year that bars education technology companies from selling student data or using that data to target students with ads. The current federal law that protects student’s privacy is the Family Educational Rights and Privacy Act of 1974, which does not protect against companies’ data mining that reveals student’s habits and profiles for targeted advertising but rather protects against official educational records from being released by schools. The President highlighted current self-regulation, the Student Privacy Pledge, signed by 75 education technology companies committing voluntary not to sell student information or use education technologies to send students targeted ads. It has been discussed whether self-regulation would work and whether the proposed Act would go far enough. The President remarked that parents want to make sure that children are being smart and safe online, it is their responsibility as parents to do so but that structure is needed for parents to ensure that information is not being gathered about students without their parents or the kids knowing about it. This hinted at a notification requirement and opt-out for student data mining that is missing from state legislation but is a requirement of the Children’s Online Privacy Protection Act of 1998. Specifically, COPPA requires companies and commercial website operators that direct online services to children under 13, collect personal information from children under 13, or that know they are collecting personal information from children under to children under 13 to provide parents with notice about the site’s information-collection practices, obtain verifiable consent from parents before collecting personal information, give parents a choice as to whether the personal information is going to be disclosed to third parties, and give parents access and the opportunity to delete the children’s personal information, among other things.

President Obama noted that his speech marked the first time in 80 years—since FDR—that a President has come to the FTC. His speech at the FTC on Monday was the first of a three-part tour leading up to his State of the Union address. Next, the President also planned to speak at the Department of Homeland Security on how the government can collaborate with the private sector to ward off cyber security attacks. His final speak will take place in Iowa, where he will discuss how to bring faster, cheaper broadband access to more Americans.

This past weekend, California Gov. Jerry Brown vetoed legislation (SB 467) which would have would have required California law enforcement officials to get a warrant to access online communications. The current Federal statute governing the search and seizure of these records is the Electronic Communications Privacy Act, known as ECPA for short. Enacted in 1986, many commentators believe that portions of ECPA have outlived their usefulness and that the law must be changed; that was the goal of SB 467.

ECPA consists of three main parts: Title III which outlaws unauthorized wiretaps while establishing procedures for law enforcement; the Stored Communications Act which deals with government access to stored electronic communications; and procedures governing the installation and use of pen registers. It is the Stored Communications Act portion that has become the focus of reform attempts. Written at a time when only a fraction of the population was using computer networks to communicate, it permits law enforcement to obtain the contents of electronic communications without a warrant so long as they are at least 180 days old and stored on a third party computer. With the advent of remote servers, cloud computing, and other realities of the internet age, advocates have been hoping for a broad rewrite of this seemingly arcane standard.

Efforts to reform the Stored Communications Act had a fair bit of momentum in the Senate prior to the 2012 election but stalled before Congress adjourned. In March of this year, Judiciary Chairman Sen. Patrick Leahy (D-Vt) and Sen. Mike Lee (R-Ut) again introduced ECPA reform legislation to create a search warrant requirement for electronic communications stored on third party computers. The bill also requires a notice to the individual whose communications have been seized within ten days of the warrants execution. Similar legislation has been introduced in the House. Both chambers seemed poise to act, but like so many other issues in the current Congress, efforts have become stalled over budget and fiscal issues.
The proposed California law paralleled the proposed Senate legislation in many ways, but departed significantly in its notice requirement. SB 467 would have mandated that individuals receive notice of the warrant within three days, a time frame that is more compressed than the 10-days outlined in Chairman Leahy’s bill. This requirement brought out opposition within California’s law enforcement community with police and prosecutors expressing their doubts.
In his veto statement Gov. Brown gave voice to those concerns saying, “The bill, however, imposes new requirements that go beyond those required by federal law and could impede ongoing criminal investigations.”

With this veto the focus will again (once Congress solves/punts its fiscal fights) come back to the efforts of Sens. Lee and Leahy to move ECPA reform out of the Senate. With strong bipartisan backing, the question is more of when, not if, this happens.

Representative Edward Markey and Representative Joe Barton, Co-Chairmen of the Congressional Privacy Caucus, sent a letter on February 2nd to Facebook’s CEO, Mark Zuckerberg, requesting information about Facebook’s announcement on January 14 that it plans to make its users’ addresses and mobile phone numbers available to third-party web sites. The feature would make a user’s address and mobile phone number accessible to external web site application developers, but not a user’s friend’s addresses or mobile phone numbers

Facebook then announced on January 17 that it decided to delay this new feature, after having received “some useful feedback that [Facebook] could make people more clearly aware of when they are granting access to this data.” Facebook is currently making changes to the feature “to help ensure [users] only share this information when [they] intend to do so.”

The letter asks several questions about the feature:

The First question asks Facebook to describe whether any user information in addition to address and mobile phone number would be shared with third party applications developers, and also to describe whether such information was shared prior to the January 17 announcement of the suspension of the feature.

The Second question asks Facebook to describe what user information will be shared with third party applications developers once the feature is again implemented.

The Fourth question asks Facebook to describe the process which led to the suspension of the program.

The Sixth question asks Facebook to describe Facebook’s internal policies and procedures for ensuring that this feature complies with Facebook’s privacy policy.

The Eighth question asks whether users who had opted in to sharing their addresses and mobile phone numbers will be able to have this information deleted by third party applications or web sites.

The Ninth question asks Facebook whether Facebook’s privacy policy would have been violated if this feature would have been implemented.

The Tenth question asks Facebook if, given the sensitivity of personal addresses and mobile phone numbers, Facebook believes that opt-in should be clearer and more prominent.

Representative Markey said that “Facebook needs to protect the personal information of its users to ensure that Facebook doesn’t become Phonebook." Representative Barton said that “The computer – especially with sites like Facebook – is now a virtual front door to your house allowing people access to your personal information. You deserve to look through the peep hole and decide who you are letting in.”